Australian Stock Market Report – Midday 7/3/13

MID-SESSION REPORT
(12.30pm AEST)

The Australian market continues on its bumpy ride this week, with investors not keen to back up yesterday's stellar rise. The All Ordinaries Index (XAO) is down 1.8 per cent, with all sectors trading in the red. Despite the big falls, keep in mind that Tuesday was the best day for local shares since October 2011. The miners were the standout performers yesterday, but are slumping most at lunch. Last night, most markets eased despite FOMC President Dudley reaffirming his previous comments that the Fed is more likely than not to continue its support of the US economy.

The volatility has been evident over the past few days, with the market improving by around 1.5 per cent on three occasions over the past ten sessions; however has fallen by around a similar margin on three separate sessions.

The start of a new month and quarter always is a busy time for economists and today is no different. Retail trade rose by just 0.1 per cent, a smaller margin than expected. Australia recorded a bigger than forecast $670 million trade surplus, while the number of newly built properties sold over the month has hit the highest level in 18 months in May.

No sectors are escaping the substantial sell-off. While the resource stocks are being hit hardest, almost all regions of the market are down by at least 1 per cent. The big banks are all down by between 0.3 and 1.9 per cent, retailers such as David Jones (DJS), Myer (MYR), Harvey Norman (HVN) and JB Hi-Fi (JBH) are also all struggling.

Travel agent Flight Centre (FLT) however is improving by 0.9 per cent after confirming that it's on track to deliver another record result. Underlying profit for the year is likely to be at the top-end or even slightly above FLT's previous market guidance (according to the company). FLT is up 46 per cent this calendar year, adding to 2012's 67 per cent improvement.

BHP Billiton's (BHP) Colombia nickel mine is expected to apply for a licence to expand according to the market. BHP is the world's biggest mining company and is the second largest company on the local market (behind only CBA), however is essentially completely wiping out yesterday's gains.

Looking ahead, much of the focus over the next few days will be centred on the non-farm payrolls in the US on Friday night. The creation of 170,000 jobs is expected, together with a modest improvement in the American unemployment rate.

At lunch, 709 million shares have changed hands, worth $1.72 billion. 282 stocks are higher, 425 are in the red while 239 are unchanged.

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